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Audit Objective

Determine whether the Cattaraugus-Little Valley Central School District’s (District) Board and District officials effectively managed fund balance and reserve funds.

Key Findings

The Board and District officials did not properly manage fund balance and reserve funds. The Board and District officials:

• Did not implement our prior audit’s recommendations¹ to improve their budgeting practices and ensure surplus fund balance is in compliance with the statutory limit.
• Consistently overestimated appropriations by an average of more than $2 million a year.
• Allowed surplus fund balance to exceed the statutory limit of 4 percent. As of June 30, 2021, it was nearly $7.8 million (28 percent of the 2021-22 appropriations), exceeding the limit by more than $6.6 million or 24 percentage points.
• Maintained an unemployment insurance reserve fund balance of $227,000 which can fund average unemployment expenditures for 78 years.
• Did not ensure $2.2 million was properly restricted in a debt reserve and did not use the funds to pay related debt as required.

As a result, the District was not transparent with taxpayers and has levied more taxes than necessary.

Key Recommendations

• Reduce surplus fund balance to comply with the statutory limit.
• Reduce the unemployment insurance reserve fund balance to a more reasonable level.
• Ensure that money residing in the debt service fund is restricted in a debt reserve and used to pay related debt.

District officials generally disagreed with our findings. Appendix B includes our comments on issues raised in the District’s response.

_{1 Cattaraugus-Little Valley Central School District – Financial Management (2016M-61), which was released in June 2016}